Sen. John Albers, R-Roswell, is heading a special committee looking at tax breaks. BOB ANDRES / BANDRES@AJC.COM

Lawmakers create new programs, tax breaks without finding if they work

A new state audit says college loan-forgiveness programs designed to steer students into studying for certain professions or working in certain areas of Georgia, in some cases, aren’t well-assessed for effectiveness and may be ill-targeted.

Another one said the state may be inadequately assessing eligibility for a popular $300 million-a-year tax break aimed at helping farmers pay for things such as feed and fertilizer.

And a state Senate committee is trying to get its arms around the burgeoning number of special-interest tax breaks the General Assembly approves each session.

State lawmakers approve hundreds of bills each General Assembly session, many of which cost the state money by cutting taxes on specific businesses or creating multimillion-dollar programs. While legislators have increasingly called for accountability, a common theme of state audits is that tax breaks and new programs are poorly assessed to see whether they are doing what lawmakers promised they would.

There are exceptions, such as the very expensive and highly touted credit for making films in Georgia. Gov. Nathan Deal and his economic team release regular reports bragging about the success that tax credits have had in dramatically enlarging the filmmaking industry in Georgia.

But state senators in particular have felt overwhelmed by the number of tax bills that have flooded the chamber late in each legislative session, giving them little chance to review legislation before having to vote on everything from a sales tax break for a Savannah company wanting to open a large-yacht repai r service and a reduction for owners of cement-mixer trucks to a measure lowering the maximum state income tax rate.

“I think the volume has been what’s gotten everybody’s attention,” said Senate Appropriations Chairman Jack Hill, R-Reidsville. “That worries everybody, and it should. The volume of bills and the limited time to work on them scares all of us.”

That leads to quick, last-minute decisions and seldom to follow-up on a collection of bills that may be handing out $200 million a year in breaks.

A committee run by state Sen. John Albers, R-Roswell, has just begun a years-long study of tax breaks, taking a handful of them at a time to determine whether they work in terms of creating jobs or some other benefits, or whether they should be eliminated.

“We are fiduciaries of the state, and if we are going to do the right thing by Georgians, and be transparent, we have to have a regular process by which we measure them on a regular schedule like we would anything in state government,” Albers said.

But the issue isn’t just tax breaks. State auditors regularly do performance reviews of programs, and the lack of a thorough assessment by agencies who run them is often highlighted.

Auditors recently looked at loan-forgiveness programs — essentially incentives to recruit and retain Georgians to study for high-need occupations or areas, such as rural Georgia.

The state has several such programs — where students generally get loans forgiven if they work in a certain profession or area — for military and National Guard students, engineers, doctors, dentists, advanced practice nurses, veterinarians and for those going into public service.

State auditors said the number and cost of the programs — approved by the General Assembly — has been growing. The state budgeted about $9 million for loan-forgiveness programs this year, up 64 percent from 2015.

A big chunk of the money is spent providing money for students attending the University of North Georgia military programs or the Georgia Military College.

For about 20 years, the state has had an engineering program for students receiving degrees from Macon’s Mercer University.

The program was long a favorite of politicians from a part of the state, Middle Georgia, that held outsized political power. At the time it was created, future Gov. Sonny Perdue of Bonaire, was a Senate leader, while his neighbor, Larry Walker of Perry, was the House majority leader.

Gov. Nathan Deal’s budget office recommended eliminating the program in its fiscal 2016 review due to the small number of students completing their service obligations, the audit said, but lawmakers instead increased its funding.

Auditors said no agency has assessed whether the state is already producing enough engineers to meet demands. It also said the program appeared to not have a significant effect in the recruitment of students into engineering.

Mercer officials told auditors that at the time the program was started, Georgia needed more engineers. The state has since started new public college engineering programs. Mercer also said the program was designed not to persuade more students to major in engineering, but for engineering graduates to stay and work in Georgia.

Auditors said that a majority of loan recipients that they studied do not work as engineers in Georgia.

Still, Mercer said the program is being “properly administered” and winds up costing the state nothing because students pay back their loans.

“The need for engineers was and is now most acute at Robins Air Force Base, which is the largest economic engine in middle Georgia,” Mercer officials said in a statement to The Atlanta Journal-Constitution. “Mercer is the largest supplier of engineers to RAFB and has throughout the history of the engineering school tailored programs to meet the needs of the base and supporting industries, laser-focused on keeping the base nationally competitive.”

Auditors said some of the medical loan forgiveness programs don’t wind up helping many needy areas because the programs were designed to require graduates to work in counties with populations of less than 35,000. Some counties that fit that criteria have desperate need for medical professionals, the audit said, while some don’t.

Another audit out Friday raised questions about the Georgia Agricultural Tax Exemption, or GATE program, which exempts certain products purchased by “agricultural producers” from sales taxes. The Georgia Department of Agriculture determines eligibility for GATE cards, which are used to get the exemption.

Auditors said to make sure the right people are getting the cards and that they are being used for “qualified” purchases, improvements need to be made in the program.

It said applications don’t collect the necessary information to properly assess eligibility, that there is no established review interval in which cardholders are required to undergo subsequent eligibility checks, that the effectiveness of audits conducted by the state’s tax agency are limited by the fact that it can’t legally share its results with the agency that determines eligibility, and that the GATE cards don’t include information about a cardholder’s industry, which would help retailers determine whether they should get the exemption for the items they are purchasing.

Auditors said GATE exemptions cost state and local governments about $300 million in forgone taxes annually.

“However, the benefits of GATE have not been determined because state law does not specify the intent of the exemption and data necessary for assessing benefits have not been compiled,” auditors said.

Of the 42 GATE audits conducted by the Department of Revenue between November 2014 and April 2016, auditors said, 29 revealed ineligible cardholders and/or ineligible purchases made with the GATE card. Although the department collected the taxes owed on ineligible items, they said their analysis found that five of 13 ineligible cardholders continued to have active GATE cards following the Revenue Department’s audit findings.

The AJC reported in 2014 that 13 lawmakers who voted for the tax break got GATE cards, including a car dealer who owned a home and 23 acres in Henry County where he said he grew timber and, one day, hoped to raise animals.

The state Department of Audits and Accounts does such performance audits of programs that lawmakers approve periodically, sometimes at the request of the Senate Appropriations Committee that Hill leads.

“Everything in government needs to be reviewed, and an audit is a good place to start,” Hill said. “Auditors look at a slice of it, not all of it. But it’s a building block toward going where you want to go.”

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